Exit Strategies Every Investor Should Know!

Buy-and-hold properties work exactly how they sound – you buy the property, and then you hang onto it for awhile. The idea behind it is to maintain the property for years, weathering the ups and downs of the economy and housing market, and then ultimately selling it for (hopefully) a nice profit.

But plans don’t always work out how we want them to, do they? Things happen, life happens, and plans change.

That’s why it’s important for every investor to have an exit strategy in place. When plans change, whether it’s because of a move or a need for immediate cash or whatever the case may be, the smartest investors know that being able to quickly sell a property is the key to making the most of that asset.

If you’re a real estate investor and you don’t have an exit strategy in mind for your property, it’s time to wise up. We can help. Here are some of the best options for when YOUR plans change:

1. Use a real estate agent and sell your property to the public. This is by far one of the most commonly used strategies, especially if your house is in decent shape and located in an area where buyers are active. However, if your home looks like a rental that’s seen better days, your average buyer who wants a move-in ready home isn’t going to be interested.
2. Use a real estate agent and sell to another investor. Ah, now here’s a solution to the problem above. If your home isn’t attractive to public buyers, it may be very attractive to another investor – especially if they feel like they’re getting a great deal out of it. Even if it means you’re selling for a bit less than what you’d hoped for, remember: the goal is to get rid of the property, not make a fortune off of it.
3. Forget the agent and sell the property yourself. You can save a few thousand bucks by getting rid of the middleman (or woman) and marketing and selling the home yourself. When you cut out the agent’s commission, your profits are obviously going to be higher, which is exactly what you’re looking for. However, keep in mind that selling by owner is often more challenging, especially if you’re selling to the general public. Again, your property needs to show well to entice these buyers, and you also need to appear professional and knowledgeable in what you’re doing as the seller. However, if you decide to sell to another investor, you’ll likely see different results. You know everything there is to know about the property and how it performs, and you know what other investors are looking for so you can tailor your marketing strategies to showcase those attributes.
4. Sell the home to your current renter through a rent-to-own process. This is probably the least commonly used strategy, but it’s still a good one. In this scenario, you act as the bank and your tenant essentially pays you a “mortgage.” A promissory note is written that details the repayment terms and interest rate, and you get to enjoy a nice ROI spread out over a period of time.

No matter which exit strategy you lean toward, it’s important that you have one in place. You never know what the future holds, and if your plans to buy and hold long-term shift and you need to be able to quickly turn that property over to a new owner, having a plan in place will save you tons of stress and hassle.